Increase in household net lending
National accounts and business cycles
finsek, Financial accounts, financial investments, households and non-profit organisations, general government, abroad, balance sheets, FINSEFinancial accounts , National accounts and business cycles

Financial accountsQ1 2008



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Increase in household net lending

Preliminary financial accounts for households and non-profit institutions serving households show that net lending increased in the first quarter of 2008. This is mainly attributable to an increase in provisions for insurance technical reserves and the fact that borrowing has levelled out.

Net lending reached a low point in the second quarter of 2007, but has increased since then. The main picture is dominated by the development in insurance technical reserves. The discontinuation of individual pension savings with tax benefits and the introduction of obligatory occupational pensions may explain the low provisions for individual insurance technical reserves in the first half of 2007. From the second half of 2007, higher life expectancy figures have contributed to increased provisions for collective pension schemes. At the same time, borrowing has levelled out and the growth impulses from credit lines secured on dwellings seem to decline. This development can be connected with the increasing interest rate level and tighter credit conditions, resulting in a weaker development in the housing market.

Household net lending and change in net financial assets over the last four quarters. NOK billion. Net assets as ratio of disposable income.

Net lending in the four quarter period to the first quarter of 2008 is estimated to NOK -67 billion compared to NOK -83 billion in 2007. Net holding loss in the securities market reduced the value of financial assets held by households by NOK 24 billion in the last four-quarter period, and in total the net financial wealth was reduced by NOK 91 billion. Households’ net financial wealth amounted to NOK 388 billion at the end of the first quarter of 2008.

Huge holding losses for central government in exchange and securities markets

Central government net lending continues to increase as a consequence of the historically high price of oil. In the first quarter of 2008, central government net lending amounted to NOK 141 billion, which is NOK 31 billion higher than in the first quarter of 2007. Despite the high level of net lending the government’s net financial wealth fell by NOK 119 billion in the last quarter, mainly due to huge holding losses in the exchange and securities markets.

Preliminary financial accounts for local government indicate that the financial deficit increased in the first quarter of 2008. Local governments net lending fell by NOK 3.6 billion from NOK -13.3 billion in the first quarter of 2007 to NOK -16.9 billion in the first quarter of 2008. Local government financed a considerable part of the deficit by drawing on own assets.

Record net lending internationally

Norway’s net lending to the rest of the world is estimated to NOK 1 292 billion at the end of the first quarter of 2008 compared to NOK 1 317 billion at the end of 2007. The fall in net financial assets is caused by holding losses in the securities market and holding losses on foreign financial assets held by domestic sectors caused by currency exchange rate developments. Holding losses amounted to NOK 138 billion while net lending is calculated to almost NOK 113 billion. Net lending to the rest of the world reached record levels in the first quarter of 2008.

Financial accounts for households and non-profit institutions serving households. NOK billion
  1. quarter 2006 2. quarter 2006 3. quarter 2006 4. quarter 2006 1. quarter 2007 2. quarter 2007 3. quarter 2007 4. quarter 2007 1. quarter 2008
Financial assets 2 090 2 112 2 139 2 235 2 279 2 343 2 362 2 386 2 382
Liabillities 1 614 1 671 1 710 1 773 1 800 1 873 1 922 1 971 1 994
Net financial assets/net financial wealth  477  441  429  462  479  471  440  415  388
Change in net financial assets/net financial wealth 65 15 -15 22 3 30 11 -47 -91
Other changes 53 45 40  104 87  130 97 37 -24
Net lending 12 -29 -55 -83 -85 -101 -86 -83 -67

Financial accounts in Statbank

The financial accounts for detailed institutional sectors based on the Finse database are now available in StatBank Norway. The data are presented in three tables which show the asset relationship between sectors by instrument, financial assets and liabilities by instrument together with net financial assets (net financial wealth) and net lending by sector.

Please note that the compilation methods for quantification of the financial accounts are under development. Several variables in the current financial accounts are thus quantified on the basis of preliminary computations. Two examples of preliminary and incomplete quantified variables are unquoted shares and financial derivatives. Users should be aware of the uncertainty linked to preliminary figures when using data from the released financial accounts.

Data from the Finse database are reported to Eurostat and annual financial accounts for Norway are also available on Eurostat’s website.

Statistical discrepancies between financial and non-financial accounts

The link between non-financial and financial accounts is represented by the balancing item “net lending/net borrowing”. In theory, net lending derived from non-financial accounts should be identical to net lending derived from financial accounts. However, experience shows that there are significant discrepancies between the two parts of the accounting system. Net lending is a marginal balancing item which is calculated on the basis of large aggregates. Even relatively small errors in these aggregates may cause significant discrepancies in net lending. The observed discrepancies are caused by flaws and shortcomings in both sets of accounts. Among other factors this is due to lack of information, which has to be replaced by estimates. Examples of the problem addressed in the financial accounts are unquoted shares and financial derivatives together with households and NPISH claims towards the rest of the world and non-financial corporations.

Deviations between financial accounts and source statistics

Financial accounts are based on a list of different statistical sources and among these are accounting statistics for financial corporations and general government. The financial accounts differ from the accounting statistics due to the incorporation of market values in financial accounts and the compilation process in FINSE, which comprises several reconciliation procedures and consistency checks that may change the source statistics.


Net lending defined in non - financial accounts ( capital account ) = saving + net capital transfers - net acquisition of non - financial assets

Net lending defined in financial accounts = net acquisition of financial assets - net incurrence of liabilities

Savings is non-consumed income and can be invested in financial or non-financial assets. If savings exceed non-financial investments, a sector has surplus of funds and becomes a net lender to other sectors. In the financial transaction account, this means that the sector acquire more financial assets than liabilities. On the other hand, if savings are less than non-financial investments, investments have to be funded either by selling financial assets or incurring debts. Household investments in non-financial assets mainly reflect the purchase of new housing and fixed investments by unincorporated enterprises. They typically finance substantial parts of these investments by incurring debt in the form of loans.

Net financial assets ( net financial wealth ) = total financial assets - total liabilities

The financial balance sheet shows the financial position of a sector at the end of the reference period and is broken down into categories of financial assets and liabilities. Insurance technical reserves, currency and deposits are the predominant assets held by households, while loans provided by financial corporations (banks etc) constitute the main proportion of liabilities.

Changes in net financial asset = net lending + other change in assets , net

The change in the financial balance sheet during the reference period is a result of accumulated financial transactions and other changes in assets. The latter category mainly reflects revaluations due to changes in market prices of financial instruments.